Samsung reportedly raised chip production prices, Reuters says — Korea Herald
In Pyeongtaek, South Korea, Samsung Electronics' 4-nanometer production line is operating at full capacity. This could improve the financial performance of the company's contract chip manufacturing business amid high demand for artificial intelligence solutions and the full utilization of Taiwanese company TSMC's advanced fabs. This was reported by The Korea Herald.
According to TrendForce, Samsung's contract division revenue grew by 1.8% in April-June compared with the previous quarter. At the same time, the company's global share declined to 5.9%, while TSMC's share rose to 72.5%. Industry estimates indicate that Samsung's contract business has been operating at a loss since 2022.
Prices and fab utilization
Reuters reported in August that Samsung had raised prices by up to 15% for some new orders using 4-, 5-, and 8-nanometer process technologies. Hana Securities analyst Kim Rok-ho said that not only the size of the increase matters, but also customers' willingness to place orders at the new prices.
TSMC's capacity for chips produced using 3- and 5/4-nanometer processes was fully booked in the second quarter, TrendForce notes. According to Lee Jong-hwan, a professor of semiconductor engineering at Sangmyung University, under such conditions customers may consider not only the best available technology, but also a manufacturer capable of producing chips within the required timeframe.
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Samsung said the performance of its contract division improved significantly in the second quarter, excluding provisions related to incentive payments. The company attributed this to demand from U.S. customers and the production of base dies for HBM — logic chips beneath stacks of high-speed memory used in AI systems.
Production using the 2-nanometer process
The share of high-performance computing in Samsung's contract division revenue increased from 5% in 2017 to 28%. The company expects this segment to account for significantly more than half of the division's revenue by 2029.
At the same time, Samsung is expanding production using the 2-nanometer process and launching a plant in Taylor, Texas. This requires new engineering and operating expenses before reaching significant production volumes. In July, the company announced 2-nanometer projects for major customers in cloud computing and AI, while a long-term agreement with Tesla is expected to provide the Texas plant with a major external customer.
Local media also reported the start of trial production of AI chips for Tesla at the facility. At the same time, Qualcomm's two new flagship Snapdragon processors will be manufactured using TSMC's 2-nanometer process, indicating that the Taiwanese manufacturer is retaining its position in the advanced segment.
